Economy Remains Fragile

Michael Alter is president of SurePayroll, America?s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University.

According to SurePayroll's monthly Small Business Scorecard survey, which aggregates data from more than 25,000 small businesses nationwide, small-business hiring is up slightly in October from the month of September, bringing us to a 2.2 percent increase year-to-date. Unfortunately, small-business salaries are headed in the opposite direction, with a year-to-date decline of 7.3 percent.

Likewise, optimism among business owners is also continuing to decline, dropping to 50 percent -- one of the lowest levels of the year. With hiring increasing, the cost of labor declining, and the government's recent measures to open up credit for small businesses, you'd think small business optimism would be higher. But here's the thing: When we look a little closer, we see that most of that hiring was driven by independent contractors, not employees. And because of continually decreasing wages, less and less money is being pumped into our economy.

Finally, as many of SurePayroll's customers responded in a recent survey on the government's small-business rescue plan, the opportunity for increased credit may take too long to make a difference for some business owners who are already struggling to keep their heads above the water.

So, while Wall Street is telling us we're starting to recover, it seems that half of the business owners out there adamantly disagree. And if you ask me, no one is more in touch with the economy and how it affects their business than entrepreneurs. You are playing it safe by opting to hire independent contractors instead of employees -- and you should continue to hedge your bets. Now is the time to forget about shooting for huge growth and instead conserve cash.

Only time will tell which way we're going. But one thing's always certain to me -- as business owners, you are part of the most resilient group out there. So play it smart, keep doing without the extras, and know that this too shall pass.

The full SurePayroll Small Business Scorecard data for October including national and regional data will be available at www.surepayroll.com starting Friday, November 6.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.